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Chalice intersects massive sulphides at Mogoraib North

October 31, 2012

10m interval within broader 41m down-hole intersection of stringer and
disseminated sulphides

     __________________________________
    |Symbol:  ASX: CHN TSX:  CXN       |
    |Shares outstanding:    250 million|
    |Fully diluted: 255 million        |
    |__________________________________|

PERTH, Western Australia, Oct. 31, 2012 /CNW/ – Chalice Gold Mines Limited (ASX: CHN; TSX: CXN) is pleased to advise that it has intersected a zone of massive pyritic
sulphides with significant copper and zinc values in drilling at its Mogoraib North Project in Eritrea, East Africa (Chalice – 60%; Eritrean National Mining
Corporation (ENAMCO) – 40%).

Diamond drill hole MOGD-00021, part of a regional drilling program
targeting potential Volcanic Hosted Massive Sulphide (“VHMS”) systems
similar to the world-class Bisha Mine (Nevsun 60%: ENAMCO 40%) located
15km to the south, has intersected a 10 metre interval of massive pyritic sulphides within a broader 41 metre wide zone of stringer and disseminated sulphides (Figure 3).

The massive sulphides are hosted by a sequence of altered mafic
rhyolitic and andesitic volcanics and contain visually identified
chalcopyrite (copper iron sulphide) and sphalerite (zinc sulphide)
(Plate 1).

Systematic Niton-XRF readings on 10 cm centres along the section 145.3m
to 155.5m (10.2m interval) averaged 1.07% copper and 2.25% zinc (see cautionary note below).

Chalice’s current drilling program is targeting Volcanic Hosted Massive
Sulphide (“VHMS”) systems similar to the Bisha, Harena and Hambok
deposits to the south of Mogoraib North and is based on the commonly
developed clustering of such deposits.

The new prospect lies along the interpreted Bisha geological trend, 15km
north of the Bisha operations as shown in Figure 1. The characteristics
of the sulphide mineralisation encountered in the Company’s discovery
hole (MOGD-00021) indicate a VHMS affinity.

The prospect currently being targeted is one of numerous bedrock
conductor targets generated by a 3,825km Versatile Time-domain EM
(“VTEM”) survey flown by Chalice in 2011. In May 2012, following
modelling and further refining and ranking of these targets, the
Company embarked on a 5,000m diamond drilling program to systematically
test these targets.

The VTEM anomaly tested by MOGD-00021, T209, is one conductor anomaly
along a 4km strike length which hosts three other similar conductor
anomalies (Figure 2). Several of these, including T209, are associated
with coincident or adjacent gravity anomalies (Figure 4).

The Company is currently re-modeling the identified conductor targets
within this zone based on the results from MOGD-00021 and will commence
follow-up drilling immediately along strike. Sulphide-rich sections of
the core from MOGD-00021 have been cut and assaying for a full
multi-element suite will be expedited.

In addition, the Company will conduct a detailed ground gravity survey
over the prospective 4km strike of the T209 cluster and is planning
ground EM surveys as soon as appropriate equipment can be sourced.

Executive Chairman, Tim Goyder, said:

“This is an exciting moment for the Company. We applied for the
Mogoraib North tenement on the basis of strong geological rational that
alluvium covered areas to the north of Bisha should be prospective for
VHMS mineralisation. The intersection in MOGD-00021 validates this
belief and we look forward to undertaking further drilling to determine
the extent of mineralisation and economic potential of this newly
discovered zone.”

Cautionary Note
Mineralised drill core is being analysed using the portable Niton XLT
hand-held XRF analyser (Niton). Chalice is confident to use the Niton
as an indicator only of base metal mineralisation to report exploration results. Chalice’s Niton procedure is to
orientate and geologically log drill core and then use the Niton
instrument to record spot readings taken over a 30 second period for a
range of elements every 10-15cm. Results are averaged for intervals of
drill core and reported on a minimum width of 1m. Full assays of
half-cut NQ drill core (47mm diameter) will then be analysed by a
commercial assay laboratory. The results provided here should not be
relied upon other than as an initial indicator of significant levels of
base metals in the core tested.

Competent Persons and Qualified Person Statement
The information in this news release that relates to exploration results
is based on information compiled by Dr Doug Jones, a full-time employee
and Director of Chalice Gold Mines Limited, who is a Member of the
Australasian Institute of Mining and Metallurgy and is a Chartered
Professional Geologist. Dr Jones has sufficient experience in the field
of activity being reported to qualify as a Competent Person as defined
in the 2004 edition of the Australasian Code for Reporting of
Exploration Results, Minerals Resources and Ore Reserves, and is a
Qualified Person under National Instrument 43-101 – ‘Standards of
Disclosure for Mineral Projects’. The Qualified Person has verified the
data disclosed in this release, including sampling, analytical and test
data underlying the information contained in this release. Dr Jones
consents to the release of information in the form and context in which
it appears here.

Forward Looking Statements
This document may contain forward-looking information within the meaning
of Canadian securities legislation and forward-looking statements
within the meaning of the United States Private Securities Litigation
Reform Act of 1995 (collectively, “forward-looking statements”). These
forward-looking statements are made as of the date of this document and
Chalice Gold Mines Limited (the Company) does not intend, and does not
assume any obligation, to update these forward-looking statements,
except as required by law or regulation.

Forward-looking statements relate to future events or future performance
and reflect Company management’s expectations or beliefs regarding
future events and include, but are not limited to, statements with
respect to the estimation of mineral reserves and mineral resources,
the realization of mineral reserve estimates, the likelihood of
exploration success, the timing and amount of estimated future
production, costs of production, capital expenditures, success of
mining operations, environmental risks, unanticipated reclamation
expenses, title disputes or claims and limitations on insurance
coverage.

In certain cases, forward-looking statements can be identified by the
use of words such as plans, expects or does not expect, is expected,
budget, scheduled, estimates, forecasts, intends, anticipates or does
not anticipate, or believes, or variations of such words and phrases or
statements that certain actions, events or results may, could, would,
might or will be taken, occur or be achieved or the negative of these
terms or comparable terminology. By their very nature forward-looking
statements involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements
of the Company to be materially different from any future results,
performance or achievements expressed or implied by the forward-looking
statements. Such factors include, among others, risks related to
actual results of current exploration activities; changes in project
parameters as plans continue to be refined; future prices of mineral
resources; possible variations in ore reserves, grade or recovery
rates; accidents, labour disputes and other risks of the mining
industry, as well as those factors detailed from time to time in the
Company’s interim and annual financial statements, all of which are
filed and available for review on SEDAR at sedar.com. Although the Company has attempted to identify important factors that
could cause actual actions, events or results to differ materially from
those described in forward-looking statements, there may be other
factors that cause actions, events or results not to be as anticipated,
estimated or intended. There can be no assurance that forward-looking
statements will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such
statements.

Accordingly, readers should not place undue reliance on forward-looking
statements.

Sampling Procedures and Quality Assurance
Diamond drill core is logged and photographed prior to splitting with a
core saw. One half of the core is retained on site whilst the other
half is bagged and dispatched to the Africa Horn Preparation facility
(a division of NATA accredited Intertek Genalysis Laboratories) in
Asmara for crushing to 2mm and splitting. Certified reference
materials (CRMs) are submitted with all sample batches at the rate of 1
per 20 25 routine samples. The CRM’s inserted have values ranging from
very low to high grade. The coarse reject is stored and the split
sub sample is pulverized to a nominal 95% passing 75 micron using an
LM2 pulverizer.

The pulverized pulp is further split into two 100g to 150g sub samples;
a primary pulp sample is sent for analysis and a duplicate pulp sample
is kept as a reference and the remaining fine (-75 micron) reject is
stored. A quartz wash is pulverized between samples and is stored for
random testing of preparation contamination.

The sample pulps are transported by air to NATA accredited
Intertek Genalysis Laboratories in Perth Western Australia for assay.
For drill core and RC samples used for resource analysis the majority
of gold assaying is completed using a lead collection of 50g fire assay
method with an atomic absorption spectroscopy (AAS) finish. Additional
specified multi element assays are carried out by ICP OES on 25g
sub sample prepared using aqua regia digest. Bulk density
determinations using water immersion method are carried out on every
metre of core within expected mineralisation and every 10m within waste
zones. QA/QC monitoring is applied to all drill core assays as per the
protocols described above.

SOURCE Chalice Gold Mines Limited

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Source: PR Newswire